From Rivals to Partners

Brookshire Bros. supermarkets and Polk Oil Co. convenience stores have competed against one another for years. However, while both are based in Lufkin, Texas, and have been in business for 70 or more years, the competition did not begin in earnest until the supermarket chain entered the retail fuel business in the 1990s.

Over the years, both companies have changed perspectives, according to Jerry Johnson, president and CEO of Brookshire Bros. Polk Oil began in the fuel business but added convenience stores and started selling general merchandise. Brookshire Bros. added fuel sales to its primary focus of selling food. So, it makes sense that when the two companies merged last year, there would be useful synergies. (CSNews Online broke the news of the merger in mid-July.

Carl Ray Polk Jr., president of Polk Oil, is now managing the 29 Polk Pick It Up c-store locations branded Mobil, Chevron or Texaco, as well as the 71 Brookshire Bros. Conoco stations. Polk Oil also has commercial accounts that will continue to be supplied. Brookshire Bros. operates either B&B Express c-stores or Tobacco Barns with fueling stations located at its supermarket sites.

Synergies for Savings

"It is unique for two companies to share a common vision," Polk said in an exclusive interview with Convenience Store News. This common vision brings a list of synergies rare in mergers. "Going forward, the merger gives us five flags over Texas: Chevron, Texaco, Exxon, Mobil and ConocoPhillips," Johnson said. "If we have an interruption in supply, such as when there is unrest in an oil-supplying country or during natural disasters like hurricanes or floods, these additional brands give us the ability to secure our supply side and negotiate with the major suppliers so we can pass savings on to our customers." When Brookshire Bros. partnered with Polk Oil, it acquired seven transport trucks. The trucks will allow Brookshire Bros. to go directly to the racks in "times of need." "We are not so dependent upon third-party suppliers now," Johnson explained.

With consideration of the demographics surrounding new, as well as current c-store sites, Brookshire Bros. will add supermarket departments, products and services not always found in c-stores. For example, Brookshire Bros. merchandisers are looking at carrying meat and produce in current c-store locations. Where possible, remodeled and new c-stores will carry 8 to 12 feet of fresh meat and 8 to 10 feet of fresh produce. Some Pick It Up c-stores, as well as some Brookshire Bros. supermarket locations, will carry bulk natural foods, Johnson said. The supermarket and distribution expertise of Brookshire Bros. will eventually allow the merged company's c-stores to be self-distributed in nonperishables as well as perishables, he said.

Polk also suspects that Pick It Up c-stores will be able to improve their slim margins in the tobacco category by participating in contracts that Brookshire Bros. has with tobacco companies, and Brookshire Bros. will take over supplying ice to the Pick It Up stores. The supermarket chain has an ice plant that produces bulk ice in significant volumes.

Foodservice provides another synergy. Some Pick It Up stores offer Subway or Pizza Pro foodservice to customers. "We have looked at these food offerings in the past," Johnson said. "With the merger, we can now contract with these operations and possibly put them in some of our supermarket locations."

Brookshire Bros. also plans to add 24-hour pharmacy service to remodeled or new c-store locations, depending upon surrounding demographics. Ted Viescht, Brookshire Bros. vice president of pharmacy, will also direct pharmacy service at c-store locations. C-stores will have pharmacy staffing during certain hours, just as the supermarket locations do, with an emergency toll-free number customers can call to receive assistance from the pharmacist on call.

Brookshire Bros. developed a new super c-store model (see sidebar, left) that Johnson said will allow the newly merged company to employ many shared synergies as quickly as possible.